11/01/1999 @ 12:00AM

Driving the AFL-CIO Crazy

LEO TROY, A PEPPERY, BATTLE-decorated–we are talking World War II–Rutgers economist, has long been giving fits to organized labor and shows no signs of stopping. Now 75, and still carrying a heavy teaching load (his title is Distinguished Professor of Economics), Troy also continues to engender angst among many of his academic confreres.

From Harvard’s John Dunlop at the pinnacle (he was Secretary of Labor in the Ford Administration) to thousands of assistant professors in the ranks, the overwhelming majority of the labor professoriate has been pro-union, thoroughly supportive of collective bargaining and eternally optimistic about the prospects for a huge union recovery. They have been arguing with Professor Troy about all these matters for something like 35 years, and they keep losing the arguments. As Troy is fond of cruelly reminding them, the private sector labor force will be scarcely more unionized in 2000 than it was in 1900 (with a shade under 10% of workers in both years).

And, as he also keeps pointing out, unionism today is healthy only in the public sector. Even as it has collapsed in private industry, it has remained strong in government–ever since John F. Kennedy’s 1963 decision to allow the organization of federal workers (an initiative rapidly followed by most states). Right now, the unions have 38% of government employees, a figure that exceeds their private-sector peak (36% , in 1953). Troy was the first economist to hammer away at the public-private differential in organized labor and is arguably responsible for the Census Bureau’s decision to start publishing (as of 1983) separate series for the two sectors.

There are 504 references to Leo Troy in the Lexis-Nexis database, a figure signifying that I am not the only journalist who long ago identified him as a uniquely quotable resource–a guy who thinks like an economist, is always on top of labor-union data, remains a reliable check on all AFL-CIO claims and is guaranteed not to take his criticism of the unions beyond what the data show. There will no doubt be a lot more references later this fall, when his new book, Beyond Unions and Collective Bargaining (M.E. Sharpe, 1999), comes onstage making a case for “individual representation.”

This phrase refers to the notion that most workers do well in a world in which they are personally, not collectively, looking out for Number One. Without the protection of a collective bargainer, they shop around for the best employer. If you wonder what Professor Troy is talking about, just ask your personnel department how hard it is to keep good people these days.

Troy was tearing apart the union data long before he began challenging the premises of unionism. He first got seriously involved with the data in the mid-1950s, when he was at Columbia University getting a Ph.D. in economics under the guidance of Professor Leo Wolman, perhaps the country’s preeminent observer of labor economics. Wolman and Troy ended up doing a stint together at the National Bureau of Economic Research, where they produced a severely statistical, wholly unideological study (Trade Union Membership, 1897-1962) of American unionism.

Part of the project required them to come up with decent union membership figures over the years. It seems incredible in retrospect, but until then, the only published membership data came from the federal Bureau of Labor Statistics–which had simply published, without verification, whatever the unions told them. Troy and Wolman got hold of union financial statements (all on the public record), looked up the relevant revenue figures and divided by the required dues. The only hard part of this exercise was sweet-talking librarians into digging up the musty union financial statements.

Footnote to the above: The federal government no longer relies on union self-reporting for membership data. It now bases its figures on Census Bureau sampling done via the Current Population Survey.

Why did private unionism collapse? Everyone agrees that, even today, unionized companies pay higher wages than comparable nonunion firms–higher by 15% to 20% or so, on the consensus estimate (which Troy finds reasonable). Federal labor law states that workers who want to join unions are free–nay, encouraged–to do so. So why have workers stopped joining unions?

That question remains at the heart of the raging argument between Troy and his adversaries. The argument has had several dimensions in recent years. Such eminent scholars as Richard Freeman, Paul Weiler and Dunlop, all at Harvard, have emphasized what they see as a new reign of lawlessness among employers, who have felt emboldened since the Reagan Administration–and especially since the President’s dismissal of the striking air traffic controllers–to ignore the laws protecting workers’ rights. In support of this argument, they have pointed to the continued relative strength of European and Canadian unions, said to be flourishing in their more supportive environments. Finally, the scholars have clung to a certain long-term optimism about the prospects of the private-sector unions. At a round table conference of labor economists I presided over in the early 1980s, John Dunlop said not too much should be read into the decline up to that point. “The labor movement has always grown in surges,” he argued, adding that future surges might well come from white-collar unionism, from women, from changes in southern communities. All these themes were still being echoed in the 1994 report of the Commission on the Future of Worker-Management Relations, headed by Dunlop and supported by the Clinton Administration.

In responding to these arguments, Troy got an early break. In 1984 the AFL-CIO commissioned a survey by Louis Harris & Associates to determine what was on the minds of all those workers not joining unions. To the Federation’s presumed intense dismay, the survey showed huge majorities (around two-thirds) of nonunion workers who stated that they would vote against unions if given a chance. Some of them evidently objected to paying union dues, some felt they would do worse under unions’ pay-equalizing rules, some appeared to sense that unionized firms might be less competitive and go out of business (not a problem for public-sector workers). But hardly any (only around 2% ) of the respondents told Harris that fear of the employers played a part in their votes against unions.

The surveyed workers did not generally come across as antiunion; in the devastating words of a Harris summary, they mostly just felt that unionism was “irrelevant” to their needs.

The AFL-CIO unsurprisingly did its best to keep these findings secret, or at least limit them to pro-union academics. But one of those academics leaked the study to Troy, who has made sure that its findings received wide attention. There is abundant evidence that private-sector workers still disdain unions. In National Labor Relations Board elections, called by unions only in the slender minority of cases where their prospects seem good, they still receive only about half the votes.

Troy has been projecting declines in private-sector unionism for about three decades now. In the mid-1960s, he emphasized the decline in unions’ prospects in a post-industrial society that has more service and technology jobs than factory jobs. In the 1970s and 1980s, he also cited the role of a new global economy, in which the competition was everywhere and employers had lost their ability to pass on union-related costs to American consumers.

These arguments implied that unionism should also be declining in other advanced societies–a proposition long disputed by the Harvard troops. Much of Troy’s output in recent years has been devoted to proving that they are wrong on this point. As in the U.S., public-sector unionism is strong in Europe, Canada and Japan, and the illusion of continued union strength abroad reflects mainly the fact that their public sectors are relatively larger than ours.

Even so, unionism as a whole is on the decline today in Canada, western Europe and Japan. Government-owned Air France is a hotbed of union power, as many travelers have learned to their dismay, but in France today there is virtually no such thing as private-sector unionism.

Why is now a time for “individual representation”? Ours is an era, Troy says, of individualistic values, that is, a world in which people prefer to (and are expected to) shift for themselves. The union model, in which demands on the employer must reconcile the conflicting interests of the members–young versus old, skilled versus unskilled–is obviously at odds with these values. But the more important driver of the individual model is that it “swims with the current of market forces.”

The argument is that workers sense that their own efforts are more fairly rewarded in a market system where, of course, employers want to maximize profits but also have profit-seeking reasons for wanting a stable and reasonably happy work force, treated reasonably fairly. Rational employers want to protect their investment in human capital. Markets are, of course, imperfect, but the workers know that, too, and 90% of them (in the private sector, anyway) have concluded that there is no better alternative. It is hard to write a scenario in which the AFL-CIO starts looking healthy in the next century.